Housing prices have risen at an extremely high rate over the past 18 months, Ministry of the Finance chief economist Yoel Naveh states. According to Central Bureau of Statistics figures, prices rose by an annual 6.6% rate during this period.
The Ministry of Finance's figures, which are similar to the trend published today by the government appraiser, contradict Ministry of Construction and Housing figures showing a drop in housing market prices in Israel.
Among other things, the steep increase in real estate prices during the first half of the year is attributable to a wave of housing purchases by buyers who were waiting for a VAT exemption, and another wave of housing purchases by investors before the tax hike on purchases of an additional apartment. On the other hand, the increase in the housing price component of the index, which reflects mainly the value of rent, has recently moderated.
In a weekly review published today, the chief economist said that the inflation rate was still negative, and the index was falling at an annual 0.7% rate. The October Consumer Price Index was 0.1% higher than in the preceding month, mainly due to a spurt in the price of fresh vegetables. Naveh emphasizes that inflation in Israel is below the target range set by the Bank of Israel since June 2014.
Figures published by the Central Bureau of Statistics at the end of last week indicate recovery in economic activity. Growth in the third quarter was 2.5%, following minimal growth of 0.4% in the second quarter. The Bank Hapoalim (TASE: POLI) October Procurement Managers Index was unexpectedly good, with expansion in all components of economic activity, other than demand for exports.
Published by Globes [online], Israel business news - www.globes-online.com - on November 22, 2015
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